You need a larger health insurance cover.” You are likely to hear this statement more than once in the coming year. Insurance companies, their sales forces and financial advisor’s are likely to cite medical inflation and high incidence of lifestyle diseases to prod you to go a for a larger health cover.
“Medical inflation is rising at the rate of 18-20% every year. With healthcare cost going up, people are realising that a cover of 2-5 lakh provided by their employer or existing health insurance policy may not be adequate,” says Manasije Mishra, CEO (designate) of standalone health insurer Max Bupa.
Advances in the field of medicine are another factor. “It is a reality that cost of treatment, especially in case of serious ailments, is going up. But, this is not merely on account of medical inflation. The cost of treatment is also going up as the quality and technology applied to treatment is improving, resulting in better results, but at a higher cost,” adds Arvind Laddha, CEO, Vantage Insurance Brokers.
In 2012, two general insurance companies launched high-value policies of 50-60 lakh. Also, two top-up plans were launched during the year. “In the initial years, insurers focused on selling conventional products and there was not much product differentiation. Largely, regular health policies were sold to individuals. Now, companies are taking it a level higher with enhanced offerings like top-ups,” says Mukesh Kumar, head, HR, marketing and strategy planning, HDFC ERGO, which rolled out a top-up plan this year. Companies like ICICI Lombard,Religare Health, Apollo Munich and Max Bupa now offer high-end covers of up to 50-60 lakh. Top-up plans are offered by most private insurers including ICICI Lombard, Bajaj Allianz, HDFC ERGO, Max Bupa, Star Health and also PSU insurer United India.
DOING IT THE RIGHT WAY
Should you go for a new policy that offers a large cover? Or should you buy a top-up plan?
Top-up plans, which act as add-ons to your existing health policy, come into picture once you exhaust your existing cover. Some new top-up plans also allow you to pay a particular amount from your pocket. “Top-ups can be purchased by policyholders with an existing base cover as well as those who volunteer to meet the initial expenses – up to a threshold level – out of their own resources. The top-up will be triggered if the cost of hospitalisation exceeds this pre-agreed amount,” explains Sanjay Datta, chief (underwriting and claims) at ICICI Lombard.
However, some companies insist on a base policy – which need not necessarily be bought from them – before offering the add-on. “Our top-up product is offered only to those policyholders who already have a base indemnity policy. They have to provide details of their existing regular health policy before buying the top-up,” says Mukesh Kumar.